The sharp end of a very thick wedge

There has been quite a furore about two council houses that have been sold by the London borough of Southwark. They were, according to Amelia Gentleman in the Guardian, ‘an attractive pair of Grade II listed semi-detached buildings’ near London Bridge and the Shard. Despite Savills claiming that they are the most expensive council houses ever sold, they are in in serious disrepair, nearly uninhabitable. They raised £3 million for the council at auction and are now occupied as a protest.

You can take your pick on the rights and wrongs of this one: the council are either denuding the borough of social housing, according to the campaigners, or wisely cashing in by selling properties they can’t afford to do up to enable them to build 20 more social homes, according to the council.

The fuss draws attention to the madness of the London property market but it is also the extreme end of a growing threat to social housing. While the new development programme is mainly producing unaffordable homes at ‘affordable rent’, the stock of social rented housing being let at target rents is being reduced rapidly without being replenished. Social rented housing is under threat from many directions:

  • the Government’s ‘reinvigorated’ (ie give away) right to buy council houses which has increased sales markedly.
  • the Government’s ‘conversion’ policy, whereby social rented (mainly housing association) homes becoming available for letting are, in growing numbers, switched to so-called ‘affordable rents’ at up to 80% of market rents.
  • many ‘regeneration’ schemes, mainly flatted council estates, where the price of regeneration is the loss of a very large proportion of the social rented homes – because the works are paid for by building for private sale.
  • almost all social landlords now have an ‘asset management strategy’ which sounds like a good idea until it becomes a pretext for selling properties, normally the most valuable or the ones needing most repair, in order to fund new development.

Some councils and housing associations use the ‘Made in Chelsea’ argument to justify reductions in social housing – that is, poor people shouldn’t be allowed to live in expensive places. The problem with this rationalisation is that ‘expensive’ now includes much of London and many other parts of the country as well.

Labour is grappling with a ‘benefits to bricks’ policy which will tackle the ludicrous position where 95% of the money spent on housing is in the form of housing benefit and only 5% is in the form of investment subsidies. This is the end result of 30+ years of policy designed to raise rents and to let housing benefit take the strain.

The first clause in such a policy will need to be to stop things getting worse. The only way to make a ‘benefits to bricks’ policy effective will be to bear down on rents in the long term. The prime determinant of rents in social housing should be to cover costs net of subsidy not to bring social homes into line with market rents, which are determined by shortage. A new Labour Government will need to end the ‘affordable rent’ policy because it is making the problem worse.  Homes converted from social rent to ‘affordable rent’ should be de-converted as they become available for letting again. Beefed up regulation should put asset management under the microscope to make sure it is a useful tool designed to grow the stock of social housing not diminish it. Councils and housing associations should be under stronger duties to report on and justify sales. And there should be much stronger scrutiny of regeneration proposals if the outcome is the loss of social housing.

Most people will think the Southwark decision is entirely defensible and a good deal – as long as the 20 new homes actually get built and are let to people in housing need – but it is the sharp end of a very thick wedge. Social rented homes are the biggest asset we have in the fight to meet housing need and it is vital that the stock is protected.

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